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6, 2000 April, 2000

Highlights—May 25, 2013

  • Unión Informática (Argentina): May 28th, Strike at IBM Argentina. Excerpts: After repeated requests, and after a period of over two year from the first strike to improve the economic situation as well as the work situation of employees at IBM Argentina, Union Informatica summoned its followers and members to assemblies and it has been collectively decided that IBM Argentina workers are going on strike on May 28th.

    After the two previous strikes, one on July 28th and then again on September 28th, both in 2011, the third strike will take place by IBM Argentina workers whom progressively are becoming more organized through Unión Informática and supported by other union organizations belonging to the Confederación General del Trabajo.

    Previous strikes seriously affected the company’s day-to-day activities, and minor improvements were achieved, such as making a great percentage of the worker population full fledged employees (previously they were contract workers through companies such as Adecco) and some salaries updates to employees at the very bottom of the salary scale. These salaries were rised to an amount over $3500 pesos. ...

    IBM Argentina continues to impoverish its workers with salaries destroyed by inflation, and with its policy of downsizing. Since 2009 when IBM Argentina had almost 10,000 job positions, but personnel was downsized to currently 6500, and it’s still continuing. IBM Argentina closed down 4 of its 8 sites in the country as well as several offices in other provinces.

    However, in spite of this, the company continues to internally advertise its two digit economic growth, but this does not mean that the IBM Argentina employees are getting paid accordingly. Therefore, they’re leaving the company in search of better salaries and working conditions. ...

    IBM says that giving the retiring CEO an office and administrative support is consistent with past practice, but declined to comment further.

  • The Register (United Kingdom): IBM gets ready to push more UK and Irish bods overboard. Big Blue set to become Somewhat Smaller Blue. By Brid-Aine Parnell. Excerpts: IBM has started a 45-day consultation on letting up to 270 people go from its UK and Ireland operations. Sources have told The Register that Big Blue is once more readying the axe for employees in Blighty, adding to rounds of layoffs that have seen over 6,000 workers sacked globally since 2009. ...

    The sources say that IBM's eye is on its software division and its Systems Technology Group (STG) as potential areas from which to lose staff.

    Selected reader comments follow:

    • Only 6000 globally since 2009? "Sources have told The Register that Big Blue is once more readying the axe for employees in Blighty, adding to rounds of layoffs that have seen over 6,000 workers sacked globally since 2009." Check your facts ... it is in 10s of thousands!!!
    • Re: Interesting consequences. IBM isn't interested in hardware. It sort of pretends it is, but as a former IBM hardware salesman I got very fed up with the lack of focus on that area of IBM's portfolio. System X has a very uncertain future, and IBM's heart isn't in storage either. Software and services all day!
    • It's common knowledge that the only way to get a decent pay rise in IBM is to leave and return. I've done it and I know plenty others who have too. (Of course, this tactic isn't unique to IBM).

      The package will be offered across the whole division, and you will get to apply for it. Apparently they won't give you the package if they want to keep you. In reality, most people who apply are those who can easily walk into better jobs, and often they will be in the new job before the end of the notice period. The decision is based purely on meeting a target, so those disgruntled people who are worth far more than they are being paid will be those who leave. While they'll probably find the grass isn't a huge amount greener they'll be well compensated.

      Meanwhile, spending restrictions will continue to be tightened, so that the absolutely critical £300 flight to get an expert to a customer has to go through several layers of approval, which takes just long enough for that £300 flight to become a £1200 flight. Works well for me as I often get to fly business but doesn't make a huge deal of economic sense.

      IBM has some cracking products (and some crap too), but it's shit at promoting them properly, and as Rometty has said herself clients aren't treated as well as they should be. Pissing off the workforce even more's really not going to help that.

    • IBM are losing accounts hand over fist and failing to win new business. What a great idea; get rid of the competent technical staff who actually provide the service to IBM's customers instead of thinning out the top-heavy executive layers who contribute very little IMHO. This will only make the situation worse. There won't be a problem finding 270 people to leave - almost all my colleagues are totally fed up and can't wait to go (me included).
  • Yahoo! IBM Employee Issues message board: "Re: IBM and RAs" by "purebob2004". Full excerpt: UK RAs are voluntary right now. with involuntary bridging any gap.
  • Yahoo! IBM Employee Issues message board: "Re: IBM and RAs" by Paul Sutera. Full excerpt: Voluntary meaning, aside from 45 days of discussion, what do they get? A slightly better severance than if they waited for involuntary? It's obviously different from the USA-system of running the bison off a cliff. Or perhaps sheep would be a better animal reference. I remember in 2010 they had a long period of discussion and then suddenly a decision had to be made, affecting older folks with a pension. IBM termed the offer generous. But workers in the UK disagreed. Many took the offer anyway. IBM has been castigated publicly in both UK and German legislative houses.
  • Associated Press, courtesy of Yahoo! Finance: On Top of Big Salaries, Companies Pile on Perks. The typical big-name CEO gets perks worth nearly $162,000: private planes, resort suites. By Christina Rexrode. Excerpts: Wynn Resorts pays for founder and CEO Steve Wynn's residence at its tony Las Vegas hotel and casino at a cost of nearly $452,000. Former IBM CEO Samuel Palmisano was guaranteed an administrative assistant and furnished office for life as a retirement gift — plus a $1 million office renovation. ...

    These are not uncommon extravagances in the exclusive world of CEO perks, replete with bodyguards, chauffeurs and private jets. Last year, the median value of perks received by CEOs of big public companies was nearly $162,000, an increase of more than 9 percent, according to executive pay research firm Equilar. Perks declined in 2009, but have risen for three straight years.

  • Yahoo! IBM Employee Issues message board: "Re: On top of big salaries, companies pile on perks" by Paul Sutera. Full excerpt: Sam Palmisano also received a salary as part of the transition team after he resigned as CEO,effective January 1st, 2012. This was probably negotiated and contracted years earlier. Considering that Palmisano was also an adviser to Gerstner when he was CEO, SamP had a long tenure of decision-making that led us to our current state at IBM. While other CEOs steered their companies towards true revenue growth, Sam clung to the reins of power for over a decade and drove us to our current stagnation and decline. I don't remember the salary Sam received as part of the transition team, but I believe it was in the annual report.
  • Yahoo! IBM Employee Issues message board: "ACA Subsidy Calculator" by "alwaysontheroad4bigblue". Full excerpt: As a second-choicer who will be at the end of COBRA coverage in about three months (12 months paid by IBM, six months by me), and several years away from Medicare, I'm very interested in health insurance available through the ACA exchanges next year. In particular, I wonder if IBM will allow us to use FHA funds to purchase insurance on the exchanges. (Doubtful, but one can dream.)

    The Kaiser Family Health Foundation has put up a simple, five question form at http://kff.org/interactive/subsidy-calculator/. I was amazed to see that given my pension income alone (and not withdrawing money from my 401k which would result in additional income), my wife and I would receive a tax credit of more than 50% of the premium for a "silver" plan. And, the total cost is a fraction of what IBM currently charges pre-Medicare second-choicers for health insurance.

  • Yahoo! IBM Employee Issues message board: "Re: ACA Subsidy Calculator" by "teamb562". Full excerpt: I'm nearly in the same exact boat as you. I have to start retiree health care 9/1 and am wondering whether I should pay for it with 100% FHA with ACA coming just short 4 months later.

    I've read that as many as 60% of employers who provide some type of retiree health care are considering terminating their coverage while providing a subsidy to help their retirees pay for ACA exchange insurance. I'm unsure how this would dovetail with the Federal subsidy (up to 400% poverty) that I would easily quality for on my pension.

    I doubt IBM will just strip away all FHA dollars. So,(this is pure speculation) they might convert a percentage(say 40%) of FHA blue dollars to real green dollars to be used as a subsidy on ACA exchange insurance(yeah...I'm dreaming as well).

  • Yahoo! IBM Employee Issues message board: "Re: ACA Subsidy Calculator" by "metoolikeyou". Full excerpt: One question is what are included as income in ACA. For example, dividend, interest, stock gain, pension, social security benefit, 401/IRA distribution, etc. What are excluded?
  • Yahoo! IBM Employee Issues message board: "Re: ACA Subsidy Calculator" by "madinpok". Full excerpt: My understanding is that an updated definition of Modified Adjusted Gross Income (MAGI) will be used to determine eligibility for premium subsidies. MAGI is AGI from your 1040 tax form with certain things added back, such as IRA/401k deductions and tax exempt interest. MAGI also includes dividends, capital gains, unemployment benefits, pensions and social security.
  • Yahoo! IBM Employee Issues message board: "Beware Bans on Pay Discussions Among Employees"by "alwaysontheroad4bigblue". Full excerpt: This is an interesting article from Workforce. See http://www.workforce.com/article/20130425/BLOGS07/130429989/beware-bans-on-pay-discussions-among-employees.

    All through my IBM career (now over) management discouraged or even tried to prohibit employees from sharing salary information. I remember incidents where I was personally "counseled" by my manager for doing so.

    Excerpts: Pop quiz. What's wrong with the following paragraph, which appeared in the April 17, 2013, Wall Street Journal article entitled, Workers Share Their Salary Secrets? At Brian Bader's orientation for a tech-support job with Apple three years ago, he says, human-resources managers ran down the list of guidelines workers were expected to follow. Don't use explicit language on calls with customers. Treat other employees with respect. And, he says, they told the assembled recruits, don't discuss your pay with co-workers. ...

    If you answered, "An employer can't legally prohibit employees from discussing how much they make," give yourself a prize. ...

    Does your handbook have a policy that prohibits employees from discussing how much you pay them? If so, get rid of it.

    Do your managers and supervisor know that they cannot terminate or discipline employees for discussing how much they make? If not, train them on these rules.

  • Yahoo! IBM Employee Issues message board: "Re: Beware Bans on Pay Discussions Among Employees" by "dakra137". Full excerpt: The taboo on discussing salary varies by country. Back in the early 1990's, while on a project with some people from EMEA, at lunch one day, a fellow from IBM Denmark (or maybe Netherlands) casually asked how much I make. I nearly spit out what was in my mouth. I told him IBMers never discuss that, at least in the USA. He said that in his country it was a matter of public record.
  • Yahoo! IBM Employee Issues message board: "Re: Beware Bans on Pay Discussions Among Employees" by "maxxcurrey". Full excerpt: I ALWAYS discuss my salary, why not? My parents were big union people and they taught me early some of the policies of managers to split and control.

    One example, just after I started at IBM I mentioned to my office mate who started a week after me what I made and asked him his salary. He was ticked that with more experience he was making less so he went and demanded more or he was leaving.

    Thereafter my manager called me in and told me not to mention salary to co-workers. I said I would do that only if he put in writing to me on paper and signed it as official IBM policy. He said that he would "get back to ya on that". To date, he has never bothered to "get back to ya on that". No, it was not Sarah Palin.

    Bottom line, I was not an arse about it, I reasonably explained that I wanted written clarification so as to later not have and misunderstandings.

  • Yahoo! IBM Pension and Retirement Issues message board: "Re: Is this Group still active?" by "nowwicked". Full excerpt: I attended one of the many "social IBM" presentations recently. It was all about using Social Media, what you can do, can't do, what you should be doing in this "new age".

    After it was over I received an email asking me to take a survey. I did, It asked what was the main take away from the presentation. I replied, I took away the idea that IBM wants us to get savvy in social media, that it wants us to do it on our own time, at our own expense and they want us to promote IBM on these sites, again on our own time, at our own expense.

    The guy even went so far as to say that he serves on many IBM Boards, especially the certification and senior cert. boards and that one of the things he does is look at the individuals "social persona", how they participate in such media as part of his evaluation for passing the board.

    I mentioned that while he could do such things, it would only affect new hires, early in their career folks, people who held such things as essential. To us older folks we all know that certification and senior cert. will no longer raise our band level, raise our pay level and it really only means more weekends and nights give up to IBM for less and less pay, less bonuses and no guarantee of a long career path.

    I'm sure my comments were not taken happily.

  • Reuters: Why pension funds are eating your 401(k)'s lunch. By Linda Stern. Excerpts: Pension funds - those old guaranteed-benefit retirement plans your grandma might have told you about - outperform those in 401(k) plans year after year, according to new research from consulting company Towers Watson.

    In 2011, the last year studied, defined-benefit plans had median returns of 2.74 percent, while 401(k)s and other defined-contribution plans lost 0.22 percent. It was the widest margin since the mid-1990s, the company said.

    ...there are lessons to be learned by the two types of retirement plans' disparate returns. Here are some takeaways.

    The bigger the pool, the better the returns. Pension funds, which invest for large groups of people, can use economies of scale several ways. They can buy investments cheaper and can take bigger and different risks because not everyone in the pool will retire at the same time. While 401(k) participants have to manage money so it is ready for their own retirement date, pension fund managers can always be investing for the long haul, as younger participants balance older ones.

    The study also found that bigger pension funds beat smaller ones, and that participants in large 401(k)s did better than participants in small plans.

    The takeaway? If you leave a large company, you might want to leave your money in the 401(k) plan instead of rolling it into an individual retirement account, suggests Dave Suchsland, a senior consulting actuary with Towers Watson. You still can't take the kinds of risks a large pension fund might, but you can take advantage of better deals on mutual funds.

    Fees matter. Companies that offer pension funds tend to pay the cost of the fund and not count those fees when reporting investment returns. But 401(k) administrative expenses are often buried in the fees that participants pay, and that lowers returns. That difference alone gave pension plans a 0.66 percent annual advantage over the last 17 years, Towers Watson reported. You probably can't talk your boss into paying the whole cost of the 401(k) plan, though that would be nice. But you can at least make sure the funds you pick within your plan are the low-fee alternatives. ...

    Don't rule out the return of pensions. The bottom line of the Towers Watson research is this, in Suchsland's words: "For a plan sponsor to provide a certain level of benefit, it is cheaper to finance through the defined-benefit plan." Even though traditional pensions present more accounting challenges (because they are carried on company balance sheets), Suchsland says he believes some employers who switched to defined-contribution plans in the past few decades may switch back because of pension efficiencies and "workforce issues."

  • Glassdoor IBM reviews. Selected reviews follow:
    • IBM is a place of paradox” Delivery Program Manager Wrocław (Poland). Current Employee – been working at IBM full-time for more than a year. Pros: For sure Wroclaw Branch provides many opportunities for people who like to develop. Cons: Salary is on terrible level even on normal Polish salary and every penny is a fight. Advice to Senior Management: Hear what people are talking. No, I would not recommend this company to a friend – I'm not optimistic about the outlook for this company.
    • Overall, a great experience working with like minded people” Business Design Consultant Vác (Hungary). Former Employee – worked at IBM full-time for more than 7 years. Pros: Work life balance culture followed to the hilt. Cons: Better remuneration plus extra benefits should be included in the overall package of the employees.
    • Great Boss, no balance in GBS” Systems Architect Las Vegas, NV. Former Employee – worked at IBM full-time for more than 3 years. Pros: My boss was fantastic. He was the sole reason I stayed for so long. Cons: Regardless of what they say, work/life balance is non-existent No, I would not recommend this company to a friend.
    • Wrong company if you look for personal development” Senior Technical Architect Madrid (Spain). Former Employee – worked at IBM full-time for more than 3 years. Pros: Big company, stability could be one of the big advantages. Not easy but you could change to another business unit. Cons: Shortsighted management, only short term strategies, micromanagement, lots of bureaucracy and controls that management tried to workaround to make up their numbers. Advice to Senior Management: Define a long term strategy for the projects and customers and satisfy them even if the short term numbers are not as good. You cannot collect if you don't seed. No, I would not recommend this company to a friend – I'm not optimistic about the outlook for this company.
    • Good work life balance, work from home, ideal for women employees.” Applications Developer Hyderābād (India). Former Employee – worked at IBM full-time for more than 3 years. Pros: 1) Work life balance. Most projects have no pressure at all and are long term cool projects. 2) Chances of onsite if you stay for long period. 3) Flexible work timings. No 9 hours mandatory stay. 4) Work from home. 5) Best maternity leaves guaranteed for women employees. They stay away from office more than 2 years also :). 6) Less inspection from management and more freedom of life. 7) Internet fee will be reimbursed, medical policy is good, etc. Cons: 1) Low salaries just like other service companies. 2) No recognition from managers. Poor rewards. 3) Bad leave policy. Managers hardly approve long vacation plans. 4) No transparency in ratings. Appraisals are carried by impression rather than work or talent. 5) Not many challenging projects. Advice to Senior Management: 1) Don't simply say no to vacations or leaves. Be transparent in appraisals. Yes, I would recommend this company to a friend – I'm optimistic about the outlook for this company.
    • Great vision, marketing but ... infrastructure needs work.” Solution Architect Branford, CT. Current Employee – been working at IBM full-time for more than a year. Pros: Travel and diverse teams. Good benefits, pay. Cons: Lotus Notes is mandatory; a very hard pill to swallow if you're expert MS Outlook user. Buggy online-infrastructure and internal cluster resources kill creative flow and productivity. 401k company match is done at the end of year. Advice to Senior Management: 1) Make Lotus Notes better than MS Outlook or get rid of it. 2) Measure/publish up-time of online infrastructure systems, focus optimization efforts on what is weakest. 3) Create a single interface to find and reserve cluster resources (make it as easy or easier than Amazon EC2 or get rid of it). 4) return to the monthly 401k match.
    • Big company that seems to be relying on past success too much.” Commercial Manager Manchester, England (UK). Current Employee – been working at IBM full-time for more than 10 years. Pros: Lots of job opportunities if you're prepared to travel and work long hours. Remote working encouraged. Cons: Too many old systems all bolted together make life very hard at times. Too much red tape and too many levels of management. Review and appraisal system needs overhauling. Advice to Senior Management: Wake up !! No, I would not recommend this company to a friend.
    • White Elephant” Senior Managing Consultant Morristown, NJ. Current Employee – been working at IBM full-time for more than 10 years. Pros: It "was" an excellent company, lot of resources and assets if you really want to tap into its assets and knowledge content. Good to join for college graduates who can learn and move out for better career opportunities. Cons: Too much focus on stock and earning per share rather than employees who are key in any knowledge industry. Too much focused on cost rather than long term interest. Some time it acts like a low cost retailer rather than high value corporation. Advice to Senior Management: Focus on the people rather than Wall Street. No, I would not recommend this company to a friend.
    • Total disdain for its employees” Senior Consultant Minneapolis, MN. Current Employee – been working at IBM full-time for more than 7 years. Pros: It may look good in your resume. Cons: Total disregard for quality. Exclusive focus on reducing costs. Proposals to clients get rejected because they don't include enough people from India. Possibilities for career advancement are few as IBM is focused on reducing costs by shipping jobs abroad. The only thing IBM has increased in the US are levels of management. Advice to Senior Management: Frankly, I don't think management cares about their employees' opinion. They are only interested in making a quick buck, with total disregard to core values (i.e. quality, innovation, product development, etc.). They do this at the expense of long term goals, future viability in a competitive industry and the company's good name. Unless a luminary CEO is hired and big changes are implemented, it would not surprise me if IBM went the way of Kodak. But by that time, the people who are presently raping this company will have all received their bonuses and will be long gone. No, I would not recommend this company to a friend – I'm not optimistic about the outlook for this company.
    • Work hard and please shareholders” Anonymous Employee. Current Employee. Pros: Benefits are about the only good thing. Cons: cut every cost. training is always canned q3. Advice to Senior Management: There's no I in team. No, I would not recommend this company to a friend.
    • Operates on a very tight process—operational excellence is the culture”. Anonymous Employee. Current Employee – been working at IBM full-time for more than 10 years. Pros: is a company that makes positive difference and impact to the world through its products and services. High performance culture, tight executions with operational excellence. Cons: Every one works like a computer addict and putting in long hours is common. Earnings per hour becomes low. High performance is expected where as compensation and recognition might not really co related. Yes, I would recommend this company to a friend – I'm optimistic about the outlook for this company.
    • IBM in Dublin is a brilliant place to learn the ropes” Sales Representative. Dublin, Ireland. Former Employee – worked at IBM full-time for more than 3 years. Pros: Training is fantastic, there are plenty of opportunities to move into different roles. Cons: It's a very structured 9 to 5 Monday to Friday environment. If you are going for a Tech Support or Sales job expect a call center type of setup, that is quite inflexible and impersonal. The location in Dublin is quite far from the city center and poorly served. Advice to Senior Management: Move away from a call center environment and trust your employees more. No, I would not recommend this company to a friend.
    • IBM sucks” IT Analyst Victoria, BC (Canada). Current Employee – been working at IBM full-time for less than a year. Pros: The pay is very high. Cons: The people I work with are insane. They believe the most ridiculous things. Very brain washed. Overly concerned with security to the point where it's ridiculous. For example we have some old laptops and towers to dispose of and we send them half way across the country just so they can be disposed of at an IBM owned facility, and this is after using DBAN to wipe each hard drive. Advice to Senior Management: Fire everyone in the Victoria lab. No, I would not recommend this company to a friend.
    • Start here, but move on” Anonymous Employee. Brno (Czech Republic). Current Employee – been working at IBM full-time for more than 3 years. Pros: Great place to start. If you will be talented you have the real chance to advance fast. Good career opportunity. Managers help you in your career development. Cons: The career opportunity is real, unless you are in the wrong team, in which case you might be a talented individual who stays on the same position for 3 years. Escalation is encouraged, rather then communication and feedback. Watch out for empty promises. Advice to Senior Management: Please respect your employees by keeping your promises. Communicate more openly and ask for feedback without fearing the replies. Yes, I would recommend this company to a friend.
    • Used to be a special company. Now it is sadly just another place to work.” Senior Software Engineer, Austin, TX. Current Employee – been working at IBM full-time for more than 10 years. Pros: Variety of technologies and career path within a company. Still has a bit of prestige left. Cons: Declining morale, due to continuing and excessive offshoring. Low pay relative to competitors. Advice to Senior Management: Senior management has many skillful bureaucrats and tacticians, but lacks bold vision or courage. Too many "managers" and not enough "leaders." Still has very strong core technologies and great engineers, but whopping 10 layers of management is suffocating any creativity, and promotes too much cover-your-behind-first culture. Some recent business and HR decisions have been contradictory head scratches. It is really sad to see a once special company become another run-of-the-mill place to work. It's still a decent place to work, but no longer an inspiring and exciting company. No, I would not recommend this company to a friend – I'm not optimistic about the outlook for this company.
    • Rocky road ahead?” IT Architect. Chicago, IL. Current Employee – been working at IBM full-time for more than 10 years. Pros: Still relatively secure place to work with lots of opportunities especially if you want to live in a growth country. Opportunity to work with some of the industries brightest people and some leading edge technology. Cons: Continued downsizing of North American workforce. Constant threat of layoffs. Unfair treatment of older employees. Benefits eroding. Corporate strategy forcing huge changes inside the company in order to stay competitive. Remote workforce...hardly anyone works face to face anymore. Doesn't feel like a company that values the people who are doing most of the work but continues to reward and promote executives across the board. Advice to Senior Management: Focus on what made IBM a great company to begin with...innovative company with great products where workers were valued assets...and don't forget about your customers, they are not happy with you much anymore. No, I would not recommend this company to a friend.
  • Alliance for Retired Americans: Friday Alert. This week's articles include:
    • Voting Record Rates “The Most Unproductive Congress” in Nation’s Modern History
    • In Conference Call, Sen. Harkin Explains Plan to Give Seniors an Extra $800 per Year
    • Add Your Ideas for the AFL-CIO Convention!
    • Join Us in Creating Human Chains against Chained CPI on July 2
    • Projected Spending Numbers for Medicare and Medicaid Reduced by $900 Billion
    • President Easterling is among those Arrested at United Mine Workers Protest
    • New York State Alliance Holds its Convention
    • Coalition of Black Trade Unionists Hear from Coyle, Richard Fiesta
  • New York Times: Tech Industry Pushes to Amend Immigration Bill. By Somini Sengupta. Excerpts: The industry achieved its main goals in the draft Senate bill: an easing of the green card process and an expansion of the number of skilled guest worker visas. That draft, though, includes language that it considers excessive regulatory oversight of when a company can hire a temporary foreign worker and lay off an existing American worker.

    Executives from Silicon Valley companies say such language would effectively keep them from using the larger numbers of temporary work permits, known as H-1B visas. They also warn of more jobs being shipped overseas. They are backing proposed amendments that would reverse those provisions.

    “The amendments are very important because they allow high-tech companies to use the visas as intended rather than creating regulations that make it so difficult they cannot practically be used,” the Silicon Valley Leadership Group, which includes I.B.M. and Oracle, said in an e-mailed statement on Friday. It added that most technology companies already hire a preponderance of American workers. ...

    The industry has a powerful ally in Senator Orrin G. Hatch, Republican of Utah. His vote for the bill in the Judiciary Committee is coveted because it is expected to give the legislation crucial conservative support. He has filed several amendments that technology companies favor but that other senators, who insist on additional protections for American workers, have resisted. ...

    Silicon Valley has wasted no time in weighing in. Executives have called senators to press their case, industry lobbyists say. And those lobbyists have themselves been on hand when the committee has taken up their issues, ready to huddle with Senate aides during breaks. ...

    How can the tech companies threaten to kill comprehensive legislation “when it contains almost all they have said they wanted?” said Bruce Morrison, a former chairman of the House immigration committee who now lobbies for the Institute of Electrical and Electronics Engineers. “All of America should lose the good the bill does so that they can fire Americans and replace them with H-1Bs? Ridiculous.” ...

    Technology sector lobbyists are generally pleased with the bill. But they are now objecting to language that requires employers to ensure that an “equally qualified” American is not available for a job opening before hiring a foreign temporary worker and allows the Labor Department to regulate. One lobbyist said that could put federal labor officials in the position of “second-guessing hiring decisions.” ...

    Tech companies also object to language that would compel companies to show that they have not laid off an American employee 90 days before or after hiring a temporary foreign worker. The companies see this as bureaucratic interference. They support another amendment by Mr. Hatch that would require employers to state on paper that they have not replaced an American employee with a foreign guest worker.

  • I, Cringely: Where have you gone, Engine Charlie? By Robert X. Cringely. Excerpts: A tax policy that has companies diverting revenue to other countries with lower taxes and then holding trillions in cash offshore to further avoid taxes may be good for the companies, but it isn’t good for America.

    An immigration policy based on lying about shortages of technical talent in order to reduce real wages and longer-term costs is good for the companies but it isn’t good for America.

    That’s what’s happening right now with S.744, a bad bill that will give a green card to every foreign STEM student receiving a master’s degree or higher — this at a time when less than 50 percent of U.S.-born STEM graduates are finding employment in their fields of study.

    And sometimes what happens isn’t good for the companies or America. This latter point requires some elaboration.

    Again, let’s stick with General Motors. The popular management mantra for nearly every public company, including GM, is that management should “increase shareholder value.” The main point, indeed the only point, we’re told, of running a public company is to make the stock price go up. Anything that doesn’t contribute to increased earnings, which are supposed to translate into higher stock prices, isn’t worth doing. And so pension plans are looted and communities abandoned without a second thought. ...

    The parasites believe they are in control of the host. The liars, cheaters, bullies, con artists, misguided ideologues and former student council presidents who have been fighting for control of this nation since the 1960s have now thrown away enough treasure and eaten enough seed corn that we as a nation are nearing a tipping point. We may well be past that tipping point. And the way our leaders behave, they assume we are past it.

  • Computerworld: A stinky onion blooms in the Senate, say H-1B critics. H-1B provisions added late to Senate immigration bill ensure there will be more fights ahead. By Patrick Thibodeau. Excerpts: With the H-1B fight over and lost, Sen. Charles Grassley (R-Iowa) lashed out, almost flailing in the minutes before the Senate Judiciary Committee's final vote Tuesday.

    The tech industry had won. It was getting late in the day and the committee was moments away from adopting, in a 16-2 vote, 19-pages of tech industry sponsored amendments to the H-1B provisions in the long-awaited Senate immigration bill.

    With the votes against him, Grassley, a leading H-1B critic, dropped any need for niceties. "Let's peel back the onion and see how much this stinks," said Grassley (R-Iowa), earning some laughter from people in the committee room. ...

    "Did the supporters of the amendment know that the average unemployment (rate) for this group was 3.7% last April, compared with what this amendment has, 4.5%?" said Grassley. "This amendment does nothing to stop huge increases in H-1B visas." ...

    For instance, all H-1B hiring firms will be required to post jobs on a government sponsored Web site, but only so-called "dependent firms" -- not all companies -- will be required to offer a job to an equally or better qualified U.S. worker. Dependent firms are those with 15% or more of the workforce on visas."Requiring only the subset of H-1B dependent firms to offer jobs to better or equally qualified Americans cancels out the only possibly real and tangible protection that US workers would have gotten in this bill," said Daniel Costa, an immigration policy analyst at Economic Policy Institute.

    But Costa said affected firms will use exceptions in the law to get around the requirement of considering an equally qualified American. One is the "intending immigrant" provision for workers being sponsored for a green card. ...

    Similarly, IEEE-USA President Marc Apter was also critical. "This will allow large multinational technology companies to replace American workers with lower-cost H-1B employees," Apter said in a statement. "It would be nice if Congress would look out for its citizens rather than the profit-driven interests of employers."

    The IEEE-USA believes an increase in H-1B workers is unnecessary because the bill provides for unlimited employment-based green cards for STEM advanced degree holders. The group has supported green cards for advance degree graduates. ...

    John Miano, the founder of the Programmer's Guild, was dismissive of any of the provisions aimed at protecting workers. "As there is no enforcement in H-1B, it does not matter at all -- yet still they argue over them," he said.

  • Computerworld: Software developer wages fall 2% as workforce expands. A labor pool with plenty of young people and long unemployed older developers may be making it possible for employers to pay less. By Patrick Thibodeau. Excerpts: The U.S. tech industry added nearly 64,000 software-related jobs last year, but as the workforce expanded, the average size of workers' paychecks declined by nearly 2%.

    There are a number of possible explanations for the decline in pay, but a common one cited by analysts is simply that the new people being hired are paid less than those already on the job. ...

    David Foote, the CEO of Foote Associates, which analyzes IT hiring trends and wages, said the supply of workers in the software services segment "is plentiful" because "there are many unemployed workers who want to get back to work."

    Employers, consequently, did not need to offer generous wage packages to fill many of their jobs. "In fact, [employers] could get workers pretty cheap," said Foote. ...

    He noted that the lower-cost segment of the labor pool could include displaced baby boomers who have been out of work for some time and "will take a lower-paying job just to get back into the workforce."

  • Washington Post: Health care in retirement probably costs more than you think. By Michelle Singletary. Excerpts: In its annual look at medical expenses for retirees, Fidelity Investments said a couple, both 65, retiring in 2013 would probably need $220,000 to cover health-care expenses if the husband lives to 82 and the wife to 85, the average life expectancies.

    Oh, and in case you’re thinking, “Why yes, that makes sense if you add in possible nursing-home costs or long-term care expenses” — think again.

    The estimate does not include those costs. It applies to retirees with traditional Medicare insurance coverage.

    But there’s an upside. The $220,000 is an 8 percent drop from last year’s $240,000 estimate. ...

    Fidelity’s estimate assumes that an individual does not have employer-provided retiree health-care coverage. And this assumption is for a good reason. Another report released last year from the Employee Benefit Research Institute found that fewer private-sector employers are offering retiree health benefits. Between 1997 and 2010, the percentage of non-working retirees over 65 with retiree health benefits fell from 20 percent to 16 percent. ...

    “Because employers are under no obligation to provide retiree health benefits, except to current retirees who can prove that they were promised a specific benefit, and because (unlike defined benefit pension plans) employers are not under any obligation to pre-fund retiree health benefits, it is likely that employers will continue to make changes to those programs, especially for future retirees,” the ERBI report said.

New on the Alliance@IBM Site
  • Job Cut Reports
    • Comment 05/19/13: This explains everything "...companies should not define themselves by products", Ginni provided some advice to the audience: "The only way to survive is to continuously transform and to always have an act two"...what she meant was "always have an axe too". Joking aside, could she tell that to Apple as I am sure they will stop making products with these simply stellar words of wisdom. Couldn't make it up if you tried. -Bored-
    • Comment 05/19/13: -jj in Fishkill- Whether you can collect unemployment while on a pension depends upon what state you live in. In the case of NY I believe the answer is yes. The reason has to do with the fact that the IBM pension plan has been frozen with no new contributions. From posts that I've seen here in the past be prepared to be rejected on the first try and have to appeal. -Anonymous retiree-
    • Comment 05/19/13: Ginni...instead of preaching, understand that companies are known by what they sell...real stuff...e.g. Google defined by search mobile; Amazon, books and now cloud; and, what defines IBM today huh? Cost cuts, layoffs, outsourcing; no innovation; no new products; only esoteric crap like smarter planet. Ginni, pleases spend some time trying to differentiate IBM or be ready to SINK. -Ginnitalk-
    • Comment 05/19/13: jj: According to the NY Labor department, your unemployment benefit will be reduced if your last 18 months with IBM "made you eligible for or increased the amount of your pension." If your pension has been frozen for years, this shouldn't apply to you. Oh, and you must be looking for work. - pb in Pok -
    • Comment 05/19/13: I was among those who were RA'd in Feb 2009. 15 years at IBM with a list of Division and Group level awards as long as your arm. Received a Division Excellence Award during my first year at IBM - only two were given in the Division. Know of anyone else who won a Division Excellence Award in their first year at IBM? And yet, nothing in the end. Forced to retire when RA'ed. Hired back as a contractor - and now laid off again not because of performance but because of budget issues. Let's face it - is all about executive GREED and making the promised EPS. I am through with IBM. This is not the company that I started with back in the early 1990's. Things that go around come around. I hope Ginny and company get blind sided by what they are doing to dismantle the morale and integrity of the IBM Compny (sic) and destroy the lives of fellow IBMers who worked their butts off for the corporation. -Laid off again-
    • Comment 05/19/13: To jj in fishkill, collecting unemployment benefits while collecting an IBM pension is governed by the laws of your state of residence. In New York if your earnings in the last 18 months did not make you eligible for the pension nor increase the amount of the pension, you can collect unemployment. IBM froze the pension in December 2007 so there is no increase in pension value in the last 18 months. This is spelled out in USHR113, an IBM document you can get from the Human Resources page in IBM's intranet site W3. Your claim for unemployment may still be denied but everyone I know of who disputed the decision has been able to reverse it upon supplying the document I referenced. -AlreadyGone-
    • Comment 05/19/13: -jj in fishkill- It depends on your states unemployment laws. I did it in NJ. The key was that IBM did not contribute to your pension during your base year. -anonymous-
    • Comment 05/20/13: To want to be RA'D - My profile holder said I had to accept the lowest possible rating despite being a star performer and holding the account together if I wanted a package. The contract with the client has ended, I'm +65 and want out, but who knows what will happen. Sure could use a package to ease into retirement because I don't have a gold-plated pension and can't afford to just quit. I wasn't out-sourced, I was sold into slavery! I have documented some juicy stories about IBM managers violating BCG and federal regulations here in Canada. IBM won't really care about BCG, but federal agencies might. Best to let me out to pasture before this sheep starts bleeting. -red rose-
    • Comment 05/20/13: I'd like to ask if anyone knows: Does IBM have to let the customer know that there is going to be an RA and that IBMers who work on their account will be released? Just wondering because it directly affects the customer and I would want to know if I were a customer and my SLA might be in jeopardy. -MissinMySLA-
    • Comment 05/20/13: If you are laid off in NYS you can collect unemployment and your pension. The condition is that working over the last 6 months did not make your pension rise. Since IBM froze your pension in 1999, you are good to collect. I got the axe after 34 years in March 2012 and collected for a year. Unemployment will question you, but since your pension did not increase, you are entitled -Anonymous-
    • Comment 05/20/13: Seems the RA will be taking place soon. I just received the setup. Was just told that there is a huge funding problem and that I need to look for opportunities outside my current project. Not looking...going to look outside this s*#thole of a company. By the way, I am a full dues paying member. -Sad to be an IBMer-
    • Comment 05/21/13: The problem is this: the model is all wrong for IBM. Why should a company pay oodles of $$$ for hardware and software, when you can just lease them from Amazon cloud services, etc. I luckily (or unluckily, depends on how you look at) will survive this RA, but this is just the start. Supposedly, this is last slaughter for 2013, but with model so screwed up, we'll be doing this chure every year for a while. The model must change. -ibmlizard-
    • Comment 05/21/13: @MissinMySLA: I was on a 2 year contract and still had one more year to fulfill the contract when I was RAed. No one called the customer to let them know, I told them. In my situation the customer picked me up as a contractor and they cancelled the contract with IBM. I am still working with them and finished what the work. -Rosangel-
    • Comment 05/21/13: The mass firing is coming. Will we be meek and accept it or will we organize, walkout and raise mayhem. Send a message to Ginni. No way will you sacrifice us! -John-
    • Comment 05/22/13: Manager meetings occurring in S&D Division 5/22 and 5/23. This likely signals cuts to start happening next week right after Memorial Day. -horaceT-
    • Comment 05/22/13: Stories through the years where IBM "bean counters" determine those is RA'd and managers let people know. All without letting IBM account execs and the customer know. So the one who is RA'd tells the customer who is shocked. Not new. A case I know of, the IBMer RA'd was just signed onto a renewed contract and received a "1" pbc review and promotion just before the RA. So it is such nonsense. The accountants do not care how the accounts are affected nor how a now-gone IBMer is replaced as there was no plan. Imagine how the customer felt, and the work the poor account exec, who had been blindsided, had to do to patch things up. -anonymous-
    • Comment 05/22/13: At the exact time and place of its choosing the IBM corporation will terminate your employment. Period. It does not matter who you are, what your appraisal is or how important everyone tells you, you are. If you do not have your employment defined by a contract you are an at will employee. Your employment can and will be terminated at IBM's will or by your own will if you choose to quit. Period. No ifs, or maybes or what ifs or buts. No wiggle room at all. Its that straight forward. Instead of sweating when its going to happen organize and get that contract so you know. -Exodus2007-
    • Comment 05/22/13: Corporations the size of IBM must give employees 30 days notice before a layoff in Vermont. So, IBM will lay the person off and pay them for 30 days. This makes it look like a generous "Package". In actuality, IBM is just following the law and they don't want a disgruntled employee on the premises for 30 days. My best guess is the layoff will start next Tuesday May 28th. They have started layoffs on Tuesdays several times in the past. Tuesday into Wednesday hits all 4 of the 12 hour shifts one right after another. It may start earlier for those working traditional Monday thru Friday hours. I left IBM 5 years ago and have never been happier. -Anonymous-
    • Comment 05/22/13: 2 quick comments. Bean counters are not the problem. They just do what Finance says and Finance does what the Execs say. We get axed just as often. The IBM customer list is confidential so you probably will not be able to get that legally (plus it is huge) -beancounter-
    • Comment 05/22/13: Exodus, you are still so right on! Gosh, can you right an article on all of your insights into this present day Big Blew? I was a solid PBC 2+ (never got a 3, 2, or 1) and still got summarily RAed. There is no rhyme, no reason, only madness when working for IBM without a contract. Like the short story "The Lottery" by Shirley Jackson, when you get the "black dot" your sacrificed in an RA for IBM's bottom line, mad race for increasing EPS sake. -anonymous-
    • Comment 05/23/13: Are we expecting more people RAd than the usual annual RA? We are already struggling with low staff levels, will we be required to pick up the work from the ones left behind? -JustWondering-
    • Comment 05/23/13: 15yearsandcounting: My last 30 days there, I TOLD the manager I was going to be looking for a job 40 plus hours a week and not to expect to hear from me at all. While I was on Sametime, I was out interviewing. The manager did not give me any grief about it. If there are any of you left that are not yet affected by RA's, your only hope is to organize and Unionize. Otherwise you too will be posting your RA stories soon. -Gone_in_07-
    • Comment 05/23/13: T-Minus one week and counting till the next RAs will be announced. IBM 2nd QTR ends on June 30. Count back about 30 days from that date and that will mean next week the RA announcements will surely come. What are IBMers doing about it? -anonymous-
    • Comment 05/23/13: After almost 45 years with Big Blue I was told last week that I would be gone effective June 30th. Unofficial right now but my manager wanted to give me a heads-up. Manager has no idea who will pick up my workload. -GoodbyIBM-
    • Comment 05/23/13: 05/30/13 is the date of the RA being subtly telegraphed to our project by (BTV STG) management. Hoping for the best, but preparing for the worst. -Hardack-
    • Comment 05/23/13: @Goodby IBM: the same thing happened to me. My manager swore me to secrecy and then told me that I am on the next RA list which will go out before the end of May. He said he is sticking his neck out by telling me ahead of time; he also claimed he had absolutely no input into the RA list. I am in SWG. In a way, I am relieved and can't wait to get out of this place! -SWG vet-
    • Comment 05/23/13: Truthfully, I feel totally helpless against what is going to happen next week. Even those that make it through, the future is bleak for IBM. Customers will be leaving in droves due to the lack of innovation and due to the fact that the level of service will decline rapidly. IBM is a sinking ship. Just holding on until the bubbles come up. Captain Ginny have you already abandoned us? -PayingMember-
    • Comment 05/23/13: What have I been doing this week? Getting my resume shaped up...creating a nice profile on LinkedIn, browsing monster and dice, finding out about unemployment insurance, etc. Just getting ready for next week. If I do survive, I'll have it all ready for the next RA. I joined the Alliance, have you? -AintScared-
    • Comment 05/23/13: If and when you get the notice, work with your manager, look at the info posted here to download education, all your PBC's, as far as working that last month to transfer knowledge, sorry, IBM is on their own, look for jobs, pretty much tell your mgr that since they are letting you go they are on their own, send mgr all docs on current projects but tell them in no certain terms, they might as well mar you as not going to be working on projects, you will not be brought on as a contractor, it is done, move on. Just zip all your project docs, dump them on manager and wish them good luck then update resume. -Anonymous-
    • Comment 05/24/13: @JustWondering-- IBM has been off shoring for the past decade plus a couple of years. Whenever they lay off 1 person state side, they can afford to hire 5 in Mexico, South America, India, China, Russia. They are well positioned to replace anyone here. They will try doing the work with bare staff at first just to test the waters and @making only 20% of what you do, they can afford on the job learning curve of up to 2 years

      I quit IBM Aug 2012, I provided the manager with a 2 week notice when I found another job elsewhere. I would estimate that of the 20 people in my IBM department, at least 80% were immigrants on Visa's working on a so called government contract. (the government doesn't care either) It was not easy going to a different company due to a lot of people whom work there were laid off from IBM, and they work in survival mode.

      Working with others who have that mentality is not enjoyable to say the least. Just know and do some research if you have time, this lay off strategy has been planned for over a decade. I recall a manager of mine telling me in 2001 that IBM was planning to get rid of 125,000 employees through off shoring. These layoffs are not new, they are a plan that has been in the making.

      The Alliance has been warning people for years to organize and people just go through life hoping it won't happen to them or for whatever reason they ignore the need to stand together. I have to admit, the grass is not greener on the other side as the benefit package IBM offers is unmatched where I am now. Also, to my surprise, I opened a PMR last week for a software product. Each time I have opened a PMR it was supported by IBM employees on the Boulder campus, this time it was someone from Brazil. I was surprised and taken back a bit because it was always someone local to me on prior PMR's. She is a very kind polite professional, very intelligent and very good at her job. This person may not be replacing you, but she replaced someone in Boulder. -Planned-

    • Comment 05/24/13: @ Planned: A word on the Brazilians...and this is just a personal observation. I work with many...and yes they do seem very professional and intelligent, but they do not ask questions, they think they are smarter than they really are...and make TONS OF MISTAKES! Other offshore teams that I work with are not so cocky. Just saying. This is a first hand observation, and of many that I have worked with. They "yes" you to death, then do it the way they want, and it is almost always WRONG! Screwed up a lot of items for our US customer that take tons of time research and undo. -TowerOfBabel-
    • Comment 05/24/13: For those who think they're about to be tapped, it might be an interesting time to tell you manager that you need to take a leave of absence. The Family and Medical Leave Act of 1993 entitles you to up to 12 weeks per year of time off — unpaid, but without losing your benefits, or your job. -Anon-
    • Comment 05/24/13: Managers don't have any input into how many are cut but they sure do have input into WHO gets cut. I heard this from my 2nd line when I got hit -anonymous-
    • Comment 05/24/13: After 29 years here, I think my turn has finally come. There are subtle clues all around me that I am on the next RA list. My manager is ignoring my emails, follow-ups on ST chats are short, and don't address the issue at hand before he closes the window. I see the writing on the wall. I'm OK with it. I am so tired of fearing for my job every quarter. Let life begin ... -miss understanding-
    • Comment 05/24/13: Have a safe and hopefully relaxing Memorial Day weekend. Please remember all who serve our country. For some IBMers it might be the last holiday they have a chance to enjoy while working for IBM. I wish all those who get RAed next week the best of luck. You don't deserve to be forced out by this lousy new CEO and her callous executive staff who have no real sustainable vision for IBM.. And those that don't get RAed this time, watch your back and PLEASE DO SOMETHING like join the Alliance to stop this madness! -anonymous-
    • Comment 05/24/13: Are there any news about the Lenovo deal? I heard vague rumors that a fallback option is to spin the server business (all brands) off to a new enterprise. This could significantly reduce labor costs by transferring most staff to lower paid contracts and others to get RAed. This was further fueled by rumors about a letter from Randy McDonald to the management teams concerning a restructuring of pay. Can anybody comment on these rumors? Is it likely that IBM is going to disinvest all of STG? -Concerned-
    • Comment 05/24/13: I went to a job club meeting today close to city that I live in - very close to an IBM facility. The job club leader stated that computer hardware jobs will be hard to find in the city because a major employer in the city will be laying off bunches of folks next week. That is the latest word on the street from my perspective. I really believe STG is going to be hit really hard, and I suspect SWG will get hit too. I feel very sorry for my friends who did not see this coming, like me in Feb 2009. -Laid off again-
    • Comment 05/24/13: Spoke to manager last week, he gave me a "heads up" that the RA is coming. I expect to be on it. He said that cuts will include not only rank and file, but managers and executives. After over three decades of working for IBM I am ready to leave. Knee jerk activities, continuous cadence calls, people thrashing, and all productivity has stopped until this madness is over. IBM used to be a family, a career, all working together, now it's just a job, and the whole concept of ranking relative contribution within a unit essentially pits peer against peer graveling for key accounts, key projects, recognition and paltry crumbs for bonuses has destroyed the last vestige of what made IBM great. IBM will go down, just like the Titanic. - SEEN IT ALL -Thefielder-
    • Comment 05/24/13: "If and when you get the notice, work with your manager." Your manager will not care once he/she tells you are RAed. They might and usually avoid you. Your manager is just thankful they were not tapped for RA and are doing everything they can to avoid an RA themselves. You simply become IBM Persona non Grata. -da_facts-
    • Comment 05/24/13: A company can't cut its way to growth. Around the world, IBM sales, support, and delivery quality has been eroding for years and is plunging today. Product innovation has stalled, and morale is so low it is worthless counting. A climate of fear and distrust is pervasive. Top management is receiving huge monetary rewards for promoting the 2015 plan. Many top managers who had no stomach for the plan retired or resigned years ago. What's left is a cut-throat clan primarily concerned with getting their cash payout. The best years of this company are behind it. Many customers know this. The cuts next week will send many employees not cut looking for exits, which will further erode delivery quality and innovation. Time to move on. If not next week, then soon thereafter. -FedUp-
News and Opinion Concerning Health Savings Accounts, Medical Costs and Health Care Reform
  • Washington Post: When Medicare launched, nobody had any clue whether it would work. By Sarah Kliff. Excerpts: Medicare is, these days, an incredibly popular program. Americans overwhelmingly oppose cutting it. No politician would consider repealing it. Most think providing health insurance to all Americans over 65 is worth the both the trouble and the cost.

    This was not always true. Back in 1966, as Medicare was just about to launch, nobody knew whether the new program would provide benefits to millions or fail completely. Sound familiar?

    “What will happen then, on that summer day when the federally insured system of paying hospital bills becomes reality?” Nona Brown, a New York Times reporter, wondered in a story published April 23, 1966. “Will there be lines of old folks at hospital doors, with no rooms to put them in, too few doctors and nurses and technicians to care for them?” ...

    The American Medical Association vehemently opposed the law. Two months before President Lyndon B. Johnson signed Medicare into law, the American Medical Association ran ads across the country denouncing the program as “the beginning of socialized medicine.” ...

    The long lines that some had worried about? They never materialized. ”At the end of its third week,” the New York Times reported July 25, 1966, “the Medicare program was reported going smoothly, with difficulties in some areas of the South still the only major problem.”

  • New York Times: Pills Tracked From Doctor to Patient to Aid Drug Marketing. By Katie Thomas. Excerpts: In the old days, sales representatives from drug companies would chat up local pharmacists to learn what drugs doctors were prescribing. Now such shoulder-rubbing is becoming a quaint memory — thanks to vast databases of patient and doctor information being used by pharmaceutical companies to market drugs. ...

    The information allows drug makers to know which drugs a doctor is prescribing and how that compares to a colleague across town. They know whether patients are filling their prescriptions — and refilling them on time. They know details of patients’ medical conditions and lab tests, and sometimes even their age, income and ethnic backgrounds. ...

    Some doctors, however, expressed discomfort with the idea of sensitive data being used to sell drugs, even though federal law requires that any personally identifiable information be removed. “I think the doctors tend not to be aware of the depths to which they are being analyzed and studied by people trying to sell them drugs and other medical products,” said Dr. Jerry Avorn, a professor of medicine at Harvard Medical School and a pioneer of programs for doctors aimed at counteracting the marketing efforts of drug makers. “Almost by definition, a lot of this stuff happens under the radar — there may be a sales pitch, but the doctor may not know that sales pitch is being informed by their own prescribing patterns.” ...

    Doctors who object to the use of their prescribing data by pharmaceutical companies can opt out through a program set up by the American Medical Association in 2006. But doctors cannot block the use of their insurance claims and other data, and some doctors complain that few know the program exists. About 31,650 of the nation’s more than 767,000 practicing physicians, roughly 4 percent, have enrolled in the opt-out program since it was created, according to the A.M.A., which also sells information about doctors to companies like IMS.

  • New York Times opinion: The Outrageous Cost of a Gene Test. By David B. Agus. Excerpts: Angelina Jolie's revelation that she had had a preventive double mastectomy was eloquent and brave. She had learned that she inherited a faulty copy of a gene, BRCA1, that put her at high risk for invasive breast cancer as well as ovarian cancer. Now women everywhere are asking: Should I get the same test? What will it cost? ...

    Unlike routine tests for diabetes or high cholesterol, however, the BRCA gene evaluation — performed by only one company in the United States, Myriad Genetics — is phenomenally expensive, with a “list price” close to $4,000 when a related genomic-rearrangement test is included in the analysis, which oncologists typically recommend.

    The question is why? Today, molecular scientists like me can sequence all of an individual’s genes — at least 20,000 of them — for about $1,000. About five cents per gene.

    One company, 23andMe, charges people $99 to see if they have gene variants that put them at higher risk for 120 diseases and whether they carry a known heritable mutation in an additional 50, including cystic fibrosis, sickle cell disease and Tay-Sachs disease. (I helped found one of that company’s competitors, Navigenics, which is now owned by Life Technologies. While I have no equity stake in these companies, I am paid a consulting fee by Life Technologies.) ...

    Myriad says the average patient with insurance coverage pays about the same or less out of pocket for its BRCA test. But lost in this answer is the fact that somebody — private insurance companies, Medicare, Medicaid — pays much of the rest. Ultimately, that means that all of us are paying in the forms of higher insurance premiums, co-payments and deductibles as well as higher taxes. ...

    I’m all for innovation and the right to protect intellectual property, but when there is a clear monopoly and human lives are at stake, we need legislative action for rational and appropriate pricing. We don’t make vaccines prohibitively expensive so only the rich can protect themselves. Nor should we let other preventive measures that can save thousands of lives be priced at levels far above what normal “market conditions” would suggest. ...

    Not every woman, even those who have a strong familial history of breast cancer, wants to know if she carries a BRCA mutation. But all women with some risk factors for this genetic variant should be able to decide whether to be tested, without regard to cost.

  • USA Today: Market, insurers will keep premiums low, analysts say. By Kelly Kennedy. Excerpts: Market forces and an impetus to attract younger, healthier people into the insurance market will help keep health insurance premiums lower as the 2010 health care law takes effect on Jan. 1, industry analysts and insurance officials say.

    "If they price too high, young people won't buy insurance, and that's going to hurt the companies," said Jay Angoff, who led initial implementation of the law for HHS. "They need these people to come in. It's an industry problem."

    Starting Jan. 1, most Americans will be required to buy insurance or pay a fine. Insurers may not turn away these customers because of pre-existing conditions, age or gender, so Americans previously unable to buy insurance are likely to sign up by the millions. The changing health environment, say industry figures and analysts, will offer these new customers...

    Insurers know the subsidies included in the law for Americans who make less than 400% of the poverty level — about $92,000 for a family of four — will help offset increased premiums for young people, said Ron Pollack, executive director of Families USA, a health care advocacy group. ...

    Individual premiums decreased when Massachusetts' health care took effect, he said, because the state already had high-priced and insurers were not allowed to turn away the sick and could not charge large premium differences based on age, gender and health.

    "Other states will see exactly the opposite happen," he said. "Their premiums tend to be quite low, but they're getting skimpy insurance."

  • The Fiscal Times: The New Site That Could Change Hospital Billing Forever. Excerpts: When the Obama administration went public with the first-ever comprehensive data on disparities in hospital billing last week, we knew it would be a game changer.

    First of all, the differences are massive. A pacemaker implant that might cost a patient $36,012 in one hospital, might cost $143,124 down the road at a different hospital. There's no clear explanation as to why, and –– until now –– no simple way to go about finding out if you could get a better deal by shopping around for medical procedures first.

    That's what makes the new database such a huge deal.

    But there's just one problem we have with it: It's a beast to navigate.

    It's basically the Mother of all spreadsheets, packed with post- and pre-insurance prices for the 100 most common procedures at over 3,300 hospitals.

    Luckily, some genius has funneled all of that data into a much simpler web tool at http://www.opscost.com/.

    Just punch in your city and the procedure you'd like to compare and the tool will come up with an easy-to-read list of costs at hospitals in the area.

  • Los Angeles Times: New California health insurance rates unveiled. Health insurance premiums for Covered California, the state-run marketplace, are lower than expected. By Chad Terhune. Excerpts: "These rates are way below the worst-case gloom-and-doom scenarios we have heard," said Peter Lee, executive director of Covered California, the state agency implementing the healthcare law. "But let's be clear, some consumers will have prices that go up. There may be some sticker shock."

    The new government-run market is aimed at many of the state's uninsured and at Californians who already purchase their own health insurance. The majority of Californians receive health coverage from their employers and are not among those targeted for enrollment. ...

    In the south Los Angeles County region, for instance, rates for a 40-year-old purchasing a Silver plan ranged from $242 a month through Health Net Inc. to $325 a month through Kaiser Permanente. Overall, Los Angeles County had the lowest premiums statewide for the Silver plans.

    The average premium for individual plans sold through EHealthInsurance in California last year was $177 a month. Covered California said the average premium for the three lowest Silver plans statewide was $321 a month, albeit for more comprehensive benefits. ...

    Comparing the proposed rates for next year with current premiums is difficult, officials and experts agree, because the healthcare law mandates next year's plans to offer richer benefits and to limit consumers' out-of-pocket expenses. ...

    Federal premium subsidies will ease the bite on many people's wallets. In California, individuals earning less than about $16,000 a year will qualify for an expansion of Medi-Cal, the state's Medicaid program for the poor. Above that threshold, individuals making less than $46,000 a year and families earning below $94,000 annually will qualify for federal subsidies.

  • New York Times: States’ Policies on Health Care Exclude Some of the Poorest. By Robert Pear. Excerpts: The refusal by about half the states to expand Medicaid will leave millions of poor people ineligible for government-subsidized health insurance under President Obama’s health care law even as many others with higher incomes receive federal subsidies to buy insurance.

    Starting next month, the administration and its allies will conduct a nationwide campaign encouraging Americans to take advantage of new high-quality affordable insurance options. But those options will be unavailable to some of the neediest people in states like Texas, Florida, Kansas, Alabama, Louisiana, Mississippi and Georgia, which are refusing to expand Medicaid.

    More than half of all people without health insurance live in states that are not planning to expand Medicaid.

    People in those states who have incomes from the poverty level up to four times that amount ($11,490 to $45,960 a year for an individual) can get federal tax credits to subsidize the purchase of private health insurance. But many people below the poverty line will be unable to get tax credits, Medicaid or other help with health insurance. ...

    In most cases, she said, adults with incomes from 32 percent to 100 percent of the poverty level ($6,250 to $19,530 for a family of three) “will have no assistance.” They will see advertisements promoting new insurance options, but in most cases will not learn that they are ineligible until they apply.

    Administration officials said they worried that frustrated consumers might blame President Obama rather than Republicans like Gov. Rick Perry of Texas and Gov. Bobby Jindal of Louisiana, who have resisted the expansion of Medicaid.

    The Congressional Budget Office estimates that 25 million people will gain insurance under the new health care law. Researchers at the Urban Institute estimate that 5.7 million uninsured adults with incomes below the poverty level could also gain coverage except that they live in states that are not expanding Medicaid.

    In approving the health care law in 2010, Congressional Democrats intended to expand Medicaid eligibility in every state.

    But the Supreme Court ruled last year that the expansion was an option for states, not a requirement. At least 25 states — mainly those with Republican governors or Republican-controlled legislatures — have balked at expanding the program, in part because of concerns about long-term costs. ...

    Bee Moorhead, the executive director of Texas Impact, an interfaith group that favors the expansion of coverage, said: “A lot of people will come in, file applications and find they are not eligible for help because they are too poor. We’ll have to tell them, ‘If only you had a little more money, you could get insurance subsidies, but because you are so poor, you cannot get anything.’ ...

    In Atlanta, Amanda Ptashkin, the director of outreach and advocacy at Georgians for a Healthy Future, a consumer group, said: “Hundreds of thousands of people with incomes below the poverty level would be eligible for Medicaid if the state decided to move forward with the expansion of Medicaid. As things now stand, they will not be eligible for anything. What do we do for them? What do we tell them?”

    Jonathan E. Chapman, the executive director of the Louisiana Primary Care Association, which represents more than two dozen community health centers, described the situation in his state this way: “If the breadwinner in a family of four works full time at a job that pays $14 an hour and the family has no other income, he or she will be eligible for insurance subsidies. But if they make $10 an hour, they will not be eligible for anything.” ...

    The history of Medicaid shows that it took several years for some states to sign up in the 1960s, raising the possibility that additional states may decide to expand eligibility in coming years.

News and Opinion Concerning the "War on the Middle Class"
Minimize "It is a restatement of laissez-faire-let things take their natural course without government interference. If people manage to become prosperous, good. If they starve, or have no place to live, or no money to pay medical bills, they have only themselves to blame; it is not the responsibility of society. We mustn't make people dependent on government- it is bad for them, the argument goes. Better hunger than dependency, better sickness than dependency."

"But dependency on government has never been bad for the rich. The pretense of the laissez-faire people is that only the poor are dependent on government, while the rich take care of themselves. This argument manages to ignore all of modern history, which shows a consistent record of laissez-faire for the poor, but enormous government intervention for the rich." From Economic Justice: The American Class System, from the book Declarations of Independence by Howard Zinn.

  • AlterNet: How Did Major Hedge Fund Earn 30% Returns for 20 Years Straight? Lots of Cheating There are 8,000 hedge funds, and they are up to their eyeballs in unethical behavior. By Les Leopold. Excerpts: How would you like to invest $10,000 and watch it grow over 20 years into $1,461,920? Well that's what happened at the giant hedge fund, SAC Capital Advisors, which made a 30% return for 20 years in a row.

    How is it possible to make such profitable investments again and again and again? The U.S. Attorney for Manhattan, Preet Bharara, believes he has the answer: SAC is cheating ... again and again and again. In fact, Bharara suggests that hedge funds that engage in insider trading may be rotten to the core:

    "Given the scope of the allegations to date, we are not talking simply about the occasional corrupt individual; we are talking about something verging on a corrupt business model, for the defendants seem to have taken the concept of social networking and turned it into a criminal enterprise. " [refers to a 2011 hedge fund indictment, not the current case against SAC.] ...

    We do not know as yet to what degree SAC relied on illegally obtained information (or other illicit activities) to amass its extraordinary profits. But we do know this: hedge funds don't like to gamble. Rather they want to make their billions by betting on sure things. In researching my book, How to Make a Million Dollars an Hour, it became clear that that the hedge fund industry as a whole is up to its eyeballs in a series of unethical maneuvers that sometimes are legal, sometimes are borderline and often are outright criminal.

  • New York Times: Telecom’s Big Players Hold Back the Future. By David Carr. Excerpts: Susan Crawford, a professor at the school, has written a book, “Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age,” that offers a calm but chilling state-of-play on the information age in the United States. She is on a permanent campaign, speaking at schools, conferences and companies — she was at Google last week — and in front of Congress, asserting that the status quo has been great for providers but an expensive mess for everyone else.

    Ms. Crawford argues that the airwaves, the cable systems and even access to the Internet have been overtaken by monopolists who resist innovation and chronically overcharge consumers.

    The 1996 Telecommunications Act, which was meant to lay down track to foster competition in a new age, allowed cable companies and telecoms to simply divide markets and merge their way to monopoly. If you are looking for the answer to why much of the developed world has cheap, reliable connections to the Internet while America seems just one step ahead of the dial-up era, her office — or her book — would be a good place to find out. ...

    Ms. Crawford, with a smile on her face, says the outlook is grim. “We are in this position as a country because we assumed that the magic of the marketplace would provide competition and provide world-class communications,” she said. “But history has demonstrated that left to their own devices, companies will gouge the rich, leave out the poor, cherry-pick markets and focus solely on their profits. It isn’t evil, it’s just the way things work.”

  • Wall St. Cheat Sheet: Hey Taxpayers: You are Putting Cash in CEO Pockets. By Mont Cessna. Excerpts: Even as high-profile corporate executives call for reductions in Social Security and Medicare, they are pocketing money that could have gone to government coffers. Corporate tax law in the United States allows companies to deduct “performance” based executive compensation. Laurence Fink — chief executive officer of BlackRock Inc. and pictured above receiving an award in corporate citizenship — has received $119 million in performance compensation over the past three years, resulting in a tax break $42 million for the company. Fink is also a member of “Fix the Debt” — a lobby group that is for reducing earned benefits like Social Security and Medicare.

    Fix the Debt has recruited a number of high-profile CEOs and corporations to spread its message. Right now, the group is for pushing the retirement age to 70. The catch? The Institute for Policy Studies and Campaign for America’s Future found that the 90 publicly traded corporations that are members of Fix the Debt ended up saving between $953 million and $1.6 billion in taxes because of the performance pay loophole in U.S. tax law. ...

    The call to reduce earned benefits in the U.S. comes at a time when the rich have never been richer. Despite the efforts of movements like the 99 percenters, this inequality looks like it is go nowhere. Below is a chart showing how America families — divided into quintiles by wealth — has changed from the late 1960s to the late 2000s. The evidence is pretty clear. Erin Currier, project manager of the Pew Economic Mobility Project, said “It calls into question the quality of the opportunity Americans believe exists in the United States.”

  • The Guardian (United Kingdom): The IRS should do more, not less, scrutinizing of political groups. Since Citizens United, the super rich are using nonprofits to shield their political spending. They need more oversight. By Arn Pearson. Excerpts: The recent IRS admissions about the use of "tea party" or "patriot" labels to flag applications for nonprofit status for additional scrutiny raise serious questions about political bias, and should receive a thorough and independent investigation.

    There is rightly a growing call for House and Senate hearings to answer those questions, but any investigations must delve deeper into the bigger problem facing our democracy after the Supreme Court's decision in Citizen United: the dramatic surge in the misuse of nonprofits to hide political spending by billionaires and corporations from American voters, and the lack of any meaningful enforcement response.

    Although the IRS must enforce the law impartially, the agency should not abrogate its responsibility to enforce it in the first place. While Common Cause strongly supports an investigation, we are concerned that partisans on both sides will use this tempest to cow the IRS and forestall enforcement of the tax code.

    Reported political spending by 501(c)4s – the kind of non-profit groups at the focus of this controversy – surged to $254m in 2012, almost matching spending by political parties ($255m), according to the Center for Responsive Politics, thanks in large part to the Supreme Court's decision in Citizens United. The vast majority of that spending – 85% – came from conservative organizations, led by Karl Rove's Crossroads GPS group and Americans for Prosperity, backed by the Koch brothers. Given this disproportionate spending on behalf of conservative candidates at this point in history, most of the groups flagged will logically be conservative organizations, even using impartial criteria.

    It is patently obvious to American voters that many of these groups, on the left and right, have been formed in order to hide political spending by mega donors who want to influence the outcome of elections while keeping their identities secret.

    There is also no getting around the fact that the IRS search criteria at the heart of the current controversy were developed at a time when billionaire political players, led by the Koch brothers and Rupert Murdoch, were bankrolling Tea Party groups. In 2010, there were 129 candidates for Congress and nine Senate candidates running for office under the Tea Party label. The primary focus for many of those groups was taking out members of Congress who voted for the Affordable Care Act, and they played a major role in flipping the US House to Republican control in 2010. Some of the groups evaporated soon after the elections were over.

  • Wall Street Journal: Apple Avoided Taxes on Overseas Billions, Senate Panel Finds. By Danny Yadron, Kate Linebaugh and Jessica E. Lessin. Excerpts: Apple Inc. paid no corporate income tax to any national government on tens of billions of dollars in overseas income over the past four years, Senate investigators found, a revelation that fuels the debate over whether the U.S. tax code needs an overhaul. ...

    The Senate panel's new report focuses on Apple units in Cork, Ireland, where Apple has long based its operations for Europe, the Middle East, India, Africa, Asia and the Pacific. The units are beyond the reach of the Internal Revenue Service, which counts corporations as American if they are incorporated in the U.S.

    But Irish tax law only considers companies residents of the small European country if they are managed and controlled there, and Apple manages them from the U.S.

    The result: Apple pays little or no taxes to either country on much of its revenue earned outside the U.S., according to the report.

    One of the units, Apple Operations International, hasn't filed a corporate tax return anywhere in the past five years, the Senate panel found. The unit is the main holding company for Apple's business outside of the Americas.

    "Despite reporting net income of $30 billion over the four-year period 2009 to 2012, Apple Operations International paid no corporate income taxes to any national government during that period," the report found.

  • New York Times: Apple’s Web of Tax Shelters Saved It Billions, Panel Finds. By Nelson D. Schwartz and Charles Duhigg. Excerpts: Even as Apple became the nation’s most profitable technology company, it avoided billions in taxes in the United States and around the world through a web of subsidiaries so complex it spanned continents and went beyond anything most experts had ever seen, Congressional investigators disclosed on Monday. ...

    Congressional investigators found that some of Apple’s subsidiaries had no employees and were largely run by top officials from the company’s headquarters in Cupertino, Calif. But by officially locating them in places like Ireland, Apple was able to, in effect, make them stateless — exempt from taxes, record-keeping laws and the need for the subsidiaries to even file tax returns anywhere in the world.

    “Apple wasn’t satisfied with shifting its profits to a low-tax offshore tax haven,” said Senator Carl Levin, a Michigan Democrat who is chairman of the Senate Permanent Subcommittee on Investigations that is holding the public hearing Tuesday into Apple’s use of tax havens. “Apple successfully sought the holy grail of tax avoidance. It has created offshore entities holding tens of billions of dollars while claiming to be tax resident nowhere.”

    Thanks to what lawmakers called “gimmicks” and “schemes,” Apple was able to largely sidestep taxes on tens of billions of dollars it earned outside the United States in recent years. Last year, international operations accounted for 61 percent of Apple’s total revenue. ...

    “There is a technical term economists like to use for behavior like this,” said Edward Kleinbard, a law professor at the University of Southern California in Los Angeles and a former staff director at the Congressional Joint Committee on Taxation. “Unbelievable chutzpah.” ...

    John McCain of Arizona, who is the panel’s senior Republican, said: “Apple claims to be the largest U.S. corporate taxpayer, but by sheer size and scale, it is also among America’s largest tax avoiders.” ...

    Because of these strategies, tax experts say, Washington is forced to rely more and heavily on payroll taxes and individual income taxes to finance the government’s operations. For example, in 2011, individual income taxes contributed $1.1 trillion to federal coffers, while corporate taxes added up to $181 billion. ...

    On Capitol Hill Monday, legislators made plain their fury over what they called Apple’s “egregious” and “outrageous” conduct. While other companies have taken advantage of loopholes, Mr. Levin said, “I’ve never seen anything like this and we don’t know anybody who’s seen anything like this.”

  • Wall Street Journal: Apple Tax Bill Overstated to Investors. By Kate Linebaugh, Scott Thurm and Jessica E. Lessin. Excerpts: Among the findings of an investigation by the Senate's Permanent Subcommittee on Investigations are figures that show Apple's reported taxes substantially exceed the sum it actually pays the U.S. Treasury. ...

    Many U.S. companies pay less in taxes than they disclose to investors because of accounting rules. But, in recent years, Apple's payments to the U.S. Treasury have run well below the tax liabilities the company discloses to investors, and the gap is getting wider, according to the subcommittee's report on its lengthy examination of Apple's tax practices.

    "While legitimate reasons may exist for differences between a corporation's financial statements and its tax returns, the Subcommittee found large and growing differences in each of the three years it examined with Apple," the report said. ...

    Apple holds about $102 billion at its foreign units. "I have no current plan to bring them back at the current tax rate," Mr. Cook, the Apple CEO, said during about two hours of testimony in a Senate hearing Tuesday. ...

    Calculations by Ms. Blouin and The Wall Street Journal of Apple's financial statements suggest the company might have been able to reduce its tax provision—and increase its net income—by roughly $5.8 billion if it hadn't set aside the additional taxes on foreign earnings. "Could that be some kind of earnings smoothing?" Ms. Blouin asked.

  • New York Times: Even Before Apple Tax Breaks, Ireland’s Policy Had Its Critics. By Landon Thomas Jr. and Eric Pfanner. Excerpts: The secrets of how Apple avoided billions of dollars in taxes lie in a low-slung building of glass and brick in the hills of County Cork.

    There, in the Hollyhill Industrial Estate and elsewhere in Ireland, Apple employs a mere 4 percent of its global work force. But there, too, Apple recorded a staggering 65 percent of its worldwide income — $26 billion last year — enabling the company, according to Senate investigators, to markedly reduce its tax bill in the United States and the rest of the world. ...

    The United States Senate is hardly Ireland’s only critic on tax matters. Britain, France and other European Union countries have long been annoyed by Irish policies. During hearings in the British Parliament last week, Margaret Hodge, a member of the opposition Labour Party and chairwoman of the Public Accounts Committee, which oversees taxation, upbraided Matt Brittin, Google’s vice president for North and Central Europe, that the company’s tax practices were “devious, calculated and, in my view, unethical.” ...

    The charge by the Senate subcommittee that Apple avoided paying $44 billion in taxes in the United States by keeping the bulk of its $102 billion cash hoard offshore has struck a nerve here in a recession-racked country where unemployment is 15 percent and the government is looking for ways to repay an 80 billion euro bailout, now equivalent to $103 billion, that it received from the European Union and the International Monetary Fund in 2010. ...

    Government figures show that in 2010 the effective rate on the gross income of companies here was only 6 percent, and economists say that in some cases — as with Apple — it can go lower than that. That stands in contrast to the effective corporate tax rate in other countries: 29 percent in the United States, 22 percent in Britain, 27 percent for France and 24 percent for Germany.

  • Financial Times: Dublin cut tax burden on multinationals after US lobbying. By Jamie Smyth in Dublin and James Fontanella-Khan in Brussels. Excerpts: Dublin amended its tax code following lobbying by US industry, reducing the tax burden on multinationals that funnel royalty payments to offshore tax havens, the FT has learnt.

    The changes enabled some multinational companies to make royalty payments from their Irish-based operations directly to subsidiaries based in tax havens such as Bermuda or the Cayman Islands, without having to pay a 20 per cent withholding tax on the royalties. ...

    The change in Ireland’s tax code was introduced following lobbying by the American Chamber of Commerce of Ireland in a pre-budget submission seen by the FT. The chamber argued that Ireland’s attraction as a location for intellectual property could be “significantly improved” by the abolition of withholding tax on patent royalties. ...

    Dublin rightly argues that US politicians could prevent multinationals from avoiding tax by making changes to its own tax laws. But tax experts also point to Irish laws that allow Irish-incorporated companies to be deemed non-resident for tax purposes as enablers for tax avoidance.

    This structure enables multinationals to engage in a tax avoidance strategy known as the “Double Irish”. This mechanism relies on two Irish incorporated companies. The first is tax resident in Ireland and pays royalties to use intellectual property, which generates expenses that reduce the amount of tax it pays in Ireland. The other company, typically incorporated in Ireland but not tax resident in the country, collects the royalties in a tax haven such as Bermuda or the Caymans, thereby avoiding Irish taxes.

  • New York Times opinion: Here Comes the Sun. By Joe Nocera. Excerpts: On Tuesday, despite the overwhelming evidence presented by the Senate Permanent Subcommittee on Investigations that Apple engaged in dubious tax avoidance gimmicks, Cook claimed that Apple never resorted to tax gimmickry. Even though the company appears to pay about 10 percent of its pretax income in taxes — when the federal corporate tax rate is 35 percent — Cook said, “We pay all the taxes we owe — every single dollar.” He added that Apple had never shifted any of its American profits to an offshore tax haven when, in fact, that is basically what it has done, routing tens of billions in pretax profits to a shell corporation in Ireland that exists solely to avoid taxes in the United States. He even said that the low taxes Apple pays overseas is on the profits of its overseas sales. Not to put too fine a point on it, but this was a flat-out lie. ...

    Yet as documented both by The Times and the Senate subcommittee, Apple is as much an innovator in tax avoidance as it is in technology. Take, for instance, a scheme known as The Double Irish, which it largely invented and which many American companies have since replicated. This strategy, which was the primary focus of Tuesday’s hearing, involves setting up a shell subsidiary in an offshore tax haven — a k a Ireland — and transferring most of Apple’s intellectual property rights to the dummy subsidiary. The subsidiary, in turn, charges “royalties” that allows it to capture billions of dollars in what otherwise would be taxable profits in the United States. In Ireland, according to Apple, it pays an astonishing 2 percent in taxes, thanks to a deal it has with the government. (The Irish government denies giving Apple a special deal.) ...

    “That intellectual property and patents are the crown jewels of the company,” Levin said. “The Irish subsidiary had nothing to do with creating those crown jewels. It has no employees. It has no offices. Yet most of Apple’s profits are now offshore because they were able to utilize a shift of their intellectual property to a tax haven.”

  • The Fiscal Times: Apple’s Global Tax Shelter Days May Be Numbered. By Bruce Bartlett. Excerpts: People undoubtedly assume that the profits Apple has amassed in foreign jurisdictions relates to actual production in those jurisdictions. In fact, it does not. What companies like Apple have done is systematically transfer their intellectual property to tax havens, such as Ireland or Luxembourg, which allows them to transfer profits from higher-taxed countries such as the U.S. to places with low or nonexistent taxes.

    It’s important to understand that the vast bulk of the value of a high-tech company such as Apple is not in its production facilities, but its technology, which is ultimately ideas embodied in hardware and software, designs for computers and other devices, and the patents that protect them. Trademarks and copyrights are other important forms of intellectual property.

    Since such intellectual property is intangible, it is very easy for a company such as Apple to establish a subsidiary in some tax haven and then sell that property, based on designs, research and development done in the U.S., to the subsidiary for a pittance.

    Since much of the price one pays for Apple products is for the patent royalties, what happens is that when one buys an Apple product, Apple is actually paying its foreign subsidiary a royalty on each sale. In this way, profits made in the U.S. are realized in Ireland as the home company systematically pays royalties on its sales to its own subsidiary for the right to sell its own products in the U.S.

    In theory, IRS regulations prohibit this sort of thing. Patents sold to a foreign subsidiary are supposed to reflect the market price of those patents. If the foreign subsidiary paid the true market price to Apple for its patents, then the home company would realize a huge capital gain in the U.S. that would be taxed.

    But of course that is not what happens. Since Apple controls both sides of the transaction, it sets the sale price of its patents far below what they would be worth on the open market. This is a problem for the taxation of all multinational corporations which is called transfer pricing. It allows such companies to realize profits in low-tax jurisdictions and tax-deductible costs in high-tax jurisdictions.

  • New York Times opinion: The Corporate Tax Dodge. By Steven Rattner. Excerpts: While a Senate report detailing Apple’s aggressive tax sheltering of billions of dollars of overseas income grabbed headlines this week, little notice was paid to a surreptitious thrust at tax minimization that was announced at nearly the same moment.

    In a news release, the American drug maker Actavis announced that it would spend $5 billion to acquire Warner Chilcott, an Irish pharmaceuticals company less than half its size.

    Buried in the fifth paragraph of the release was the curious tidbit that the new company would be incorporated in Ireland, even though the far larger acquirer was based in Parsippany, N.J.

    The reason? By escaping American shores, Actavis expects to reduce its effective tax rate from about 28 percent to 17 percent, a potential savings of tens of millions of dollars per year for the company and a still larger hit to the United States Treasury. ...

    Unlike individuals, multinational corporations can shuttle profits — and sometimes even their headquarters — around the globe in search of the jurisdiction willing to cut them the best deal on taxes (and often other economic incentives).

    Much of this occurs under the guise of “transfer pricing,” the terms under which one subsidiary of a multinational sells products to another subsidiary. The goal is to generate as high a share of profit as possible in the lowest-taxed jurisdictions.

    A study by the Congressional Research Service found that subsidiaries of United States corporations operating in the top five tax havens (the Netherlands, Ireland, Bermuda, Switzerland and Luxembourg) generated 43 percent of their foreign profits in those countries in 2008, but had only 4 percent of their foreign employees and 7 percent of their foreign investment located there. ...

    As a consequence, the effective corporate tax rate in the United States fell to 17.8 percent in 2012 from 42.5 percent in 1960, according to the Federal Reserve Bank of St. Louis. (The share of federal revenues arriving at the Treasury from companies has fallen even more sharply, in part because an increasing number of businesses are taxed as individuals rather than as corporations.)

  • AlterNet: GOPer Who Got Millions in Farm Subsidies Thinks the Poor Should Starve Rather Than Get Food Stamps. By Justin Doolittle. Excerpts: Stephen Fincher, a deranged Republican congressman from Tennessee, is very angry that the federal government is committed to preventing poor people from starving to death:
    Republican Congressman Stephen Fincher of Tennessee, who supports cuts to the program, had his own Bible verse from the Book of Thessalonians to quote back to Vargas: “The one who is unwilling to work shall not eat,” he said.

    The program in question is SNAP, better known as food stamps. Fincher and his ultra-right-wing friends in the House are furious about the fact that the worst economic crisis in 80 years has resulted in more Americans needing food stamps. The whole point of programs like SNAP and other automatic stabilizers, of course, is that they kick in when the economy is struggling and people need help. Fincher is shocked and horrified by this heinous policy of ensuring that poor people and their children don't starve. Food is to be earned! Sure, this is the richest country in the history in the world, but if we provide our citizens with food to eat, then freedom is obviously dead.

    The program in question is SNAP, better known as food stamps. Fincher and his ultra-right-wing friends in the House are furious about the fact that the worst economic crisis in 80 years has resulted in more Americans needing food stamps. The whole point of programs like SNAP and other automatic stabilizers, of course, is that they kick in when the economy is struggling and people need help. Fincher is shocked and horrified by this heinous policy of ensuring that poor people and their children don't starve. Food is to be earned! Sure, this is the richest country in the history in the world, but if we provide our citizens with food to eat, then freedom is obviously dead. ...

    The reason this is even more egregious than the usual Republican class warfare is that Fincher himself is a poster boy for government dependency. It's not just that he's benefited here and there from some government help. That sort of low-level hypocrisy is almost to be expected from these types. But Fincher has received millions - $3.2 million as of June 2010 - in federal crop subsidies. The people who refer to themselves as Tea Partiers threatened to derail his candidacy over this, but then they realized that they have no principles, and supported him anyway. He's now a member of the "Tea Party Caucus," which, amazingly, is something that actually exists. Fincher's brother and father also snatched another $6.7 million in subsidies as Stephen geared up to run for Congress on a platform of eliminating "wasteful government spending." The "wasteful spending" that he had in mind, of course, was that which serves policy aims with which he disagrees, such as keeping poor people alive.

  • New York Times editorial: There Was a Time When Ending Hunger Was a National Goal for Republicans and Democrats. By Dorothy Samuels. Excerpts:“That hunger and malnutrition should persist in a land such as ours is embarrassing and intolerable.” So declared Richard Nixon in May 1969 in his now widely forgotten “Special Message to the Congress Recommending a Program to End Hunger in America.” In that document, he summoned the country to a new level of generosity and concern and laid out a series of strong legislative steps and executive actions, including a significant expansion of the food-stamps program. ...

    During the ’70s, another Republican leader, Senator Bob Dole of Kansas, forged a partnership with George McGovern, the South Dakota Democrat defeated by Mr. Nixon in 1972. They helped pass legislation to improve the accessibility and antifraud provisions of the food-stamps program. For example, it eliminated a requirement that recipients buy food-stamp coupons, a prohibitive burden for the lowest-income Americans.

    That kind of dedicated bipartisan commitment to ending hunger was light-years ago in American politics — before President Ronald Reagan and, later, Speaker Newt Gingrich made attacking food stamps a prime Republican obsession, and certainly before moderate Republicans, a disappearing breed, lived in fear of making any move that might provoke a primary challenge from a Tea Party-supported candidate. The modern food-stamps program, built with Republican and Democratic support, succeeded in eliminating the most extreme pockets of hunger in parts of the country. ...

    ...every Republican on the House Agriculture Committee voted to approve an omnibus farm bill containing a $20 billion cut in food stamps over the next decade in the program’s $800 billion or so 10-year budget. While less devastating than turning the program into a capped block grant to the states, which the House Republicans have previously endorsed, the cut is nearly five times the reduction approved by the Democratic-controlled Senate Agriculture Committee, which already is too much.

    The House bill’s cuts would end food-stamp assistance for nearly two million people, with the pain falling mainly on low-income working families with kids and older Americans, according to the Center on Budget and Policy Priorities. And as many as 210,000 children would lose access to free school lunches and breakfasts because eligibility for those meals is tied to their family’s receipt of food-stamp benefits.

    “It is just not right,” said Representative Jim McGovern, a Massachusetts Democrat (no relation to George McGovern) before his amendment to strike the cut was defeated. Not a single Republican voted to approve it.

  • U.S. Senator Bernie Sanders (I-VT): Sanders, Schakowsky Propose Tax Fairness Act. Excerpts: Sen. Bernie Sanders (I-Vt.) today introduced a bill to stop profitable corporations from sheltering income in the Cayman Islands and other tax havens. The legislation also would end tax breaks for companies that ship jobs and factories overseas. ...

    “At a time when we have a $16.5 trillion national debt and an unsustainable federal deficit; at a time when roughly one-quarter of the largest corporations in America are paying no federal income taxes; and at a time when corporate profits are at an all-time high, it is past time for corporate America to contribute significantly to deficit reduction,” said Sanders, a member of the Senate Budget Committee.

    “Even as profits grow to record levels, corporations’ share of tax revenues paid has dropped significantly in recent decades. Sen. Sanders and I are offering a comprehensive and commonsense solution that would eliminate tax subsidizes for big oil companies and corporations that are shipping jobs and profits overseas,” Schakowsky said. ...

    According to a 2008 Government Accountability Office Report, 83 of the Fortune 100 companies in the United States use offshore tax havens to lower their taxes. Today, U.S. corporations have an estimated $1.7 trillion of un-repatriated foreign profits sitting offshore.

    Sanders also released a report today on how 31 corporations represented by the Business Roundtable have avoided $128 billion in federal income taxes by setting up more than 500 subsidiaries in tax haven countries. The Business Roundtable recently released a report calling for Congress to slash Social Security and Medicare benefits something that Sanders called “shameless.” ...

    Under the legislation proposed by Sanders and Schakowsky, corporations would pay U.S. taxes on their offshore profits as they are earned. The legislation would take away the tax incentives for corporations to move jobs offshore or to shift profits offshore because the U.S. would tax their profits no matter where they are generated.

  • New York Times opinion: Kill Bill. Excerpts: United Republic, a liberal-leaning campaign finance reform organization dedicated to reducing the influence of money in American politics, recently produced a striking graphic that illustrates how corporate America wins huge breaks from Congress at very little cost. The cordial relations now include a growing number of Democrats in both the House and the Senate, whose support the banks need if they want to roll back parts of the 2010 financial overhaul, known as Dodd-Frank.
  • According to statistics United Republic assembled, the prescription drug industry spent $116 million lobbying for legislation to prevent Medicare from bargaining down drug prices — legislation that enabled drug companies to make an additional $90 billion annually. That amounts to an extraordinary 77,500 percent return on investment. Oil companies, in turn, had a return on investment of 5,900 percent, and multinational companies, 22,000 percent.

    While the general public may be angered by these reports, the lobbying industry loves them: what could be better publicity for attracting new clients? For example, the Carmen Group, a Washington lobbying firm, boasted on its Web site that for every dollar it collected in fees, clients got $100 in benefits. ...

    Despite the reforms that have been aimed at them over the past few decades, lobbyists have become a semi-permanent class with ever-expanding reach – they write legislation, they kill legislation. They have usurped many of the political functions that once belonged to elected officials, in part by adapting to new political ecologies faster than those who seek to counter their influence.

    Insofar as they are protecting the status quo, lobbyists insulate calcified interest groups from challenge. They put up roadblocks that become ever-higher barriers to innovation. At a time when sectors of the economy ranging from health care to education to manufacturing are under more or less permanent siege, the tentacles of the lobbying community are choking off open exchange between officeholders and the voters they represent. They have created and now maintain a stifling stasis. It is hard to see how this ends well.

  • DealBook: Banks’ Lobbyists Help in Drafting Financial Bills. By Eric Lipton and Ben Protess. Excerpts: Bank lobbyists are not leaving it to lawmakers to draft legislation that softens financial regulations. Instead, the lobbyists are helping to write it themselves.

    One bill that sailed through the House Financial Services Committee this month — over the objections of the Treasury Department — was essentially Citigroup’s, according to e-mails reviewed by The New York Times. The bill would exempt broad swathes of trades from new regulation.

    In a sign of Wall Street’s resurgent influence in Washington, Citigroup’s recommendations were reflected in more than 70 lines of the House committee’s 85-line bill. Two crucial paragraphs, prepared by Citigroup in conjunction with other Wall Street banks, were copied nearly word for word. (Lawmakers changed two words to make them plural.)

    The lobbying campaign shows how, three years after Congress passed the most comprehensive overhaul of regulation since the Depression, Wall Street is finding Washington a friendlier place.

    The cordial relations now include a growing number of Democrats in both the House and the Senate, whose support the banks need if they want to roll back parts of the 2010 financial overhaul, known as Dodd-Frank. ...

    In recent weeks, Wall Street groups also held fund-raisers for lawmakers who cosponsored the bills. At one dinner Wednesday night, corporate executives and lobbyists paid up to $2,500 to dine in a private room of a Greek restaurant just blocks from the Capitol with Representative Sean Patrick Maloney, Democrat of New York, a cosponsor of the bill championed by Citigroup. ...

    The close ties hardly surprise Wall Street critics, who have long warned that the banks — whose small armies of lobbyists include dozens of former Capitol Hill aides — possess outsize influence in Washington.

    “The huge machinery of Wall Street information and analysis skews the thinking of Congress,” said Jeff Connaughton, who has been both a lobbyist and Congressional staff member. ...

    “The bill restores the public subsidy to exotic Wall Street activities,” said Marcus Stanley, the policy director of Americans for Financial Reform, a nonprofit group.

    But most of the Democrats on the committee, along with 31 Republicans, came to the industry’s defense, including the seven freshmen Democrats — most of whom have started to receive donations this year from political action committees of Goldman Sachs, Wells Fargo and other financial institutions, records show.

  • Smirking Chimp: The Corporate Dictatorship of PBS and NPR. By Thom Hartmann. Excerpts: PBS is blowing it, and their decision not to air a documentary on the Koch brothers is pretty horrifying proof of it.

    But it wasn't always this way. On November 7, 1967, President Lyndon B. Johnson signed into law the Public Broadcasting Act.

    The act set up public broadcasting in the United States, by establishing the Corporation for Public Broadcasting, which led to the creation of the Public Broadcasting Service, or PBS, and National Public Radio.

    After signing the act into law, Johnson said that, “It announces to the world that our Nation wants more than just material wealth; our Nation wants more than a 'chicken in every pot.' We in America have an appetite for excellence, too. While we work every day to produce new goods and to create new wealth, we want most of all to enrich man's spirit. That is the purpose of this act.” ...

    When public broadcasting in America was first established, the intent was that Congress would provide funding to the Corporation for Public Broadcasting, which would in turn divide that funding up among the various public television and radio stations across the country. This worked great for years. ...

    But, with the onset of “Reaganomics” 33 years ago, federal funding to the Corporation for Public Broadcasting has been slashed. As a result, public broadcasting institutions now rely more and more on corporate and billionaire cash to operate, which is probably why PBS and NPR now filter what they play on their airwaves, so that they don’t anger their wealthy backers.

    This is where the documentary “Citizen Koch” comes in.

    “Citizen Koch” is a documentary about money and politics, focusing heavily on the uprising that took place in Wisconsin in 2011 and 2012.

    It talks about how the Citizens United decision paved the way for secretive political spending by major players, including the Koch Brothers.

    As Brendan Fischer over at the Center for Media and Democracy’s PRWatch points out, the documentary was originally supposed to air on PBS stations nationwide, but its funding was abruptly cut off when, it appears, David Koch was offended.

If you hire good people and treat them well, they will try to do a good job. They will stimulate one another by their vigor and example. They will set a fast pace for themselves. Then if they are well led and occasionally inspired, if they understand what the company is trying to do and know they will share in its sucess, they will contribute in a major way. The customer will get the superior service he is looking for. The result is profit to customers, employees, and to stcckholders. —Thomas J. Watson, Jr., from A Business and Its Beliefs: The Ideas That Helped Build IBM.

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